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Eight Must Reads for the CRE Industry Today (May 26, 2020)

New analysis from CoStar showed that 14 of the 20 largest mall tenants are either apparel retailers or department stores, including several names that have now filed for bankruptcy. The National Association of Home Builders index on build confidence has fallen to Great Recession levels, reports Million Acres. These are among today’s must reads from around the commercial real estate industry.

  1. This chart shows just how much America’s malls are incredibly dependent on struggling retailers “A new analysis by commercial real estate services firm CoStar found that 14 of the 20 largest mall tenants are either apparel retailers or department store chains. Names on the list include bankrupted Forever 21 and L Brands’ Victoria’s Secret, which announced this week it plans to close 250 stores in 2020, with more closures on the way.” (CNBC)
  2. Multifamily Builder Confidence at Great Recession Levels “The National Association of Home Builders (NAHB) says its leading indicator for multifamily housing investment is showing waning confidence in that market for the months ahead…. Builders and developers responding to the survey reflected the lowest confidence in the apartment and condo market since the fourth quarter of 2009, during the height of the Great Recession.” (Million Acres)
  3. CMBS Resilience Faces a Big Test “In the wake of the shutdown of the economy prompted by COVID-19, CMBS spreads widened, which increased the cost of capital for securitization programs and made them less competitive. That volatility has made lenders reluctant to originate and warehouse loans that have an uncertain exit.” (Commercial Property Executive)
  4. CRE Economists Think Current Recession Won't Be as Bad as the 2008 Crisis “Nearly 40 real estate economists and analysts feel the COVID-19 recession will impact real estate markets and values less severely than the 2008 financial crisis—except for retail and hotel real estate. The economists predicted there will be a $275 billion decrease in real estate transaction volumes in 2020, according to a survey in May by the Urban Land Institute. (GlobeSt.com)
  5. KKR continues move into European logistics real estate with Etche France deal “KKR has acquired a majority stake in real estate company Etche France from BMF Group and its co-founders for an undisclosed sum Etche owns and operates a portfolio of around 120 assets throughout France, valued at around €400m in the logistics, light industrial, and office sectors.” (Private Equity News)
  6. In June, up to 2,500 stores in Mexican shopping malls will close definitively. “They will close their doors permanently due to the landlords’ impossibility of reaching an agreement for the payment of rent, and because they have not received income for almost eight weeks that they remain closed, warned the Union of Retailers of Mexico (URM).” (The Yucatan Times)
  7. China’s $941 Billion Sovereign Fund Seeks More Resilient Assets “China Investment Corp. is looking for more resilient assets in markets battered by the coronavirus pandemic as the nation’s $941 billion sovereign wealth fund seeks to boost long-term returns, Executive Vice President Zhao Haiying said. The Beijing-based company added to its investments in credit markets in recent months, especially investment-grade loans in the U.S., after the Federal Reserve eased a liquidity crunch.” (Bloomberg)
  8. New York City Business And Civic Leaders Are Now Pushing For Property Tax Relief “The groups are asking the mayor to freeze property tax rates and assessments so that tax bills do not increase, reduce interest penalties from 18% to 3% and allow property owners to pay their taxes on monthly payment plans.” (Forbes)
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